But you still hear people who have invested for their pensions saying that they are just not getting enough interest nowadays to afford to live properly, and governments suggesting that10% returns are around the corner, a rate that can only be raised by settinbg part of your economy on fire.

Any idiot can face a crisis - it's day to day living that wears you out.

For the last 200 years, the US stock market has produced a 7-8% real annual return, ie a doubling every 10 years. Same is true for the Swedish stock market for the last 100 years,

The interesting thing however, is that there were actually quite few years when you got these 7-8%. Having a 20% increase or a 10% fall was more par the course, and there were periods (such as after the 1929 crash) when it took 25 years or more for the stock market to recover.

What's the lesson here? Well, there are some really basic lessons a lot of people keep forgetting. Like, a share is not something abstract: it is a share in a company. And if said company is a reasonably stable and solid business, it will pay you dividends. The (reinvested) dividends are in general half of the the total returns from the stock market in the last 100 years. So don't ignore those sustainable dividend payers.

With solid dividends you can get a reasonable cash stream from your savings even when the economy falls into the dreaded liquidity trap, and while you wait out that 20 year lull in the stock market. And don't worry: if you die while waiting, your kids can always inherit your shares.

Agent Smith: I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species and I realized that you're not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You're a plague and we are the cure.

Except of course if Mr Smith were a biologist, he would know that moose, foxes and other mammals behave that way as well. What make us different is that we have devised ways to increase the carrying capacity of the land, through the use of cleverness and fossil fuels.

It can work as long as not all of the proceeds are reinvested. A consol paying 7 % can be perfectly sustainable. Expecting to be able to take the payout from the consol and use it to buy another 7 % consol, and so on most certainly is not.

Compounding interest is usually unsustainable, which is why a prudent lender should insist that interest be paid as it accrues.

A not insignificant fracion of all capital is not in the stock market, but in (generally) far less risky investments like bank accounts, corporate and sovereign bonds, or real estate. As they (usually and in the long run) have a lower return, a higher return on stocks might very well be sustainable even in the long run, as long as economic growth runs at a reasonable clip.

A not insignificant fraction of all capital assets is not in the stock market, but in (generally) far less risky investments like bank accounts, corporate and sovereign bonds, or real estate. As they (usually and in the long run) have a lower return, a higher return on stocks might very well be sustainable even in the long run, as long as economic growth runs at a reasonable clip.

Only assuming that you do not reinject your gains from the stock market into the stock market. If you do, then the stock market's fraction of all assets in the economy will increase.

But why build a factory when you can simply invest in one with less risk and better return? Of course sooner or later you run out of bricks and mortar and are left with paper and electrons, but isn't it loverly while it lasts?